ConocoPhillips (COP), the third-largest U.S. oil company, and partner Origin Energy Ltd. (ORG) approved the first stage of a $20 billion liquefied natural gas project in Australia to supply the fuel to Asia.

Shipments from the first phase, estimated to cost $14 billion, are expected to begin in mid-2015, Sydney-based Origin said today in a statement. Total annual output capacity from stages one and two of the Australia Pacific LNG venture will be 9 million metric tons of LNG, the company said.

Conoco and Origin are among energy companies building Australian LNG ventures to tap rising Asian demand for less- polluting alternatives to coal. LNG prices are headed for a three-year high as Japan seeks additional shipments to replace nuclear capacity damaged by the March 11 earthquake and tsunami and China increases imports to boost power production.

“We believe the prospects of LNG markets have improved relative to six months ago,” Grant King, Origin’s managing director, said on a call with reporters. “Compared with 2009 and 2010, quite clearly demand for energy and the oil price remain more robust than people might have thought.” ...

Approval for the project follows the start of construction of rival coal seam gas-to-LNG ventures in Queensland state being built by BG Group Plc (BG/) and Santos Ltd. (STO) Adelaide-based Santos said in January its project in Queensland would cost $16 billion, while BG said in October it would invest $15 billion in its Australian LNG venture. The three Queensland ventures are using U.S. contractor Bechtel Corp.

From the moment Origin Energy and ConocoPhillips locked in China’s Sinopec as an equity participant and foundation customer, it was almost a foregone conclusion that their giant Australia Pacific LNG project would gain financial investment decision approval.

It is, nevertheless, a massive milestone in Origin’s history, in the development of the coal seam gas-fed export LNG industry in Queensland, and in the Australian export LNG sector more generally.

The first phase of the project – the first LNG train with a capacity to produce 4.5 million tonnes of LNG per annum – will cost $US14 billion but the APLNG partners are already marketing the gas they could produce from a second train with similar capacity.

A decision to go ahead with the construction of that second train, which would push the cost of the project up to $US20 billion, is likely to be made within six to nine months.

Origin is coy about the differing economics of a single train project versus one with two trains, but the $US14 billion initial commitment does include a significant component of costs related to the infrastructure to support a two-train project, which is why the second train is budgeted to cost only $US6 billion.

The group is adamant, however, that the economics of a $US14 billion single-train project would still deliver attractive rates of return well above its internal hurdle rates.

Despite the potential over-capitalisation of that first train in the unlikely event the second train is deferred or shelved, APLNG will support that train with its lowest-cost gas.

If the second train comes on stream, the consortium will need to access higher cost gas but will generate returns on the excess capital it is investing in the initial train in anticipation of the second, and it also expects to extract efficiency gains over time.

The other factor working in favour of the economics of the second train is that to attract Sinopec as the foundation customer – and the Sinopec contract accounts for almost all the production from the first train – APLNG would not only have had to offer an equity inducement (Sinopec is taking up a 15 per cent interest) but gas on relatively attractive terms.

While it is possible that APLNG will offer equity to larger customers for the second train’s output, it is unlikely that the equity on offer will be as significant as Sinopec was able to negotiate, that the terms will be as favourable or that the pricing of the LNG will be as attractive

APLNG should get a better yield from that production, which in any event is likely to be marketed to smaller customers and traders on a more opportunistic basis.

While there are now a host of new LNG projects under development in Australia, including three committed and another likely at Gladstone, the APLNG partners are convinced they will be getting their gas into the market at a period where there will be a considerable gap between uncontracted demand and then uncontracted supply available to meet that demand.

First gas from their plant is scheduled for mid-2015, with gas from the second train flowing in early 2016.

Royal Dutch Shell is in no rush to develop its LNG venture in Gladstone, under the belief that costs will decline after the current rush of LNG work in Queensland subsides, according to a report by the Australian Financial Review that quoted the company's chief executive, Peter Voser.

What with all the flak over emissions and how best to reduce them, you could be forgiven for thinking the end of the industry is nigh. But the past few days has seen a flurry of takeover activity, starting last Monday with Peabody's $4.7 billion bid for Macarthur Coal and ending the week with BHP Billiton's $14 billion tilt for American gas producer Petrohawk.

Then, before the market even opened yesterday, Santos jumped in with an agreed mop-up of pubescent coal seam gas outfit Eastern Star Gas, valuing the group at just shy of $1 billion. At a nominal 90¢ a share, the deal delivers Eastern Star shareholders a whopping 51 per cent premium to last Friday's closing price.

Rather than spelling the death knell for fossil fuels, it would appear the carbon price arrangements announced last week have partially eliminated the uncertainty that has caused energy and power companies to continually delay long-term investment decisions.

BHP's expansion of its American energy portfolio obviously falls outside the Australian carbon tax proposal but gives a clear indication the mining giant sees a future in lower emissions energy sources as carbon pricing becomes a global inevitability.

It was BHP's chief executive Marius Kloppers who last year reignited calls for carbon pricing while power suppliers like Origin Energy's Grant King have roundly criticised the inordinate length of time it has taken successive Australian governments to implement a carbon pricing policy.It takes up to eight years to get a power station from the drawing board to the paddock and in the policy vacuum that has existed here for most of the past decade, operators like Origin have been unable to decide whether to build old-style, low-tech operations belching out coal fumes or something a little more modern.

That has left a worrying dearth of investment in power generation, particularly in the eastern states.

It therefore is no coincidence that the junior partner in Santos's latest coal seam gas expansion is the Hong Kong-based TRUenergy which, along with Origin, snapped up the NSW state government-owned electricity distribution companies last year. TRUenergy also owns the Yallourn brown-coal-fired power station in the Latrobe Valley, one of the world's dirtiest.

Under the terms of the friendly deal announced yesterday, Eastern Star Gas shareholders will swap their shares for Santos scrip, giving the Adelaide-based oil and gas group full control. But a second leg of the deal will see Santos emerge with 80 per cent of Eastern Star's gas permits with TRUenergy accounting for the remaining 20 per cent.

Eastern Star has extensive reserves in the Gunnedah Basin but, as a corporate minnow, was always constrained by a lack of capital in developing the resource. Crunch time was approaching, either to joint venture with a much bigger partner for a smaller slice of the future, or merge. ....

Santos will now have a major presence in every eastern Australian onshore gas basin from Moomba in South Australia near the Queensland border to the giant fields of the Bowen and Surat basins inland from Gladstone and in the Otway basin in Victoria.

Just how and where it will ship the gas from the Gunnedah Basin has yet to be decided. It may decide to pipe it up to its new $18 billion Gladstone liquefied natural gas plant, currently under construction. Or it could opt for another port facility at Newcastle.

The $730 million bid by Santos for NSW coal seam gas (CSG) group Eastern Star Gas was a welcome relief from the investor gloom that has characterised the CSG sector in the last 12 months.

Share prices of the CSG companies not yet swept up by the big boys of the industry, with their gas export plans, are popping again, regardless of the on-going environmental campaign against the industry.

Investors are again playing a who-is-next game, driving up CSG share prices across the board. Bow Energy and Metgasco have led the pack, with Dart Energy and Comet Ridge also receiving some new attention.

Julia Gillard has also helped fuel the renewed interest in the CSG sector, with the proposed carbon tax set to drive a shift away from coal-fired power generation to gas-fired power with its 60 per cent lower emissions

But the reality is that with or without the Santos bid and the carbon tax, the CSG sector was due for a return of investor interest on the simple premise that Australia’s eastern seaboard faces a gas shortage, one in which domestic gas prices will have to about double to pull back gas that would otherwise head offshore to higher priced markets.

It is a theme that Morgan Stanley zeroed in on in the wake of the Gillard minority government unveiling its carbon tax plan on July 10. “The era of cheap and plentiful gas in eastern Australia is over,’’ the broker declared. ‘’Steady demand growth and depletion of historical conventional production is leading to a shortage evident after 2014, with CSG and other unconventional gas required to meet the gap.’’

The broker said that it was generally accepted that the carbon tax would increase the use of gas as a ``transition’’ fuel for power generation.

Assume that will increase demand for gas, and a case can be built that annual eastern state gas demand is set to grow from around 720 petajoules in 2011 to more than 1350 petajoules by 2020.

But there isn’t enough gas to meet that sort of growth. Morgan Stanley reckons that existing conventional gas supply (mainly Bass Strait and the Cooper Basin) will be largely depleted within 10 years.

The build-up in CSG resources was meant to flood the market. But there isn’t enough of that either as the multiple gas export projects being built at Gladstone in Queensland will soak it all up to chase the much higher export prices.

Morgan Stanley says the end result of all that is obvious – domestic gas prices are ``likely to escalate sharply to divert high-cost unconventional gas earmarked for export markets back to the domestic market’’.

``We believe this will take effect after 2014 as existing long term contracts wind down and need to be replaced. A gap-up to export parity (about $7.50 a gigajoule) is the likely first step,’’ Morgan Stanley said.

That means those that own gas resources on the eastern seaboard are heading towards a golden era. It also means that we have not seen anything yet in home energy bill shocks.

“It’s hard to kill a city," West began, “but easy to kill a company." The mean life of companies is 10 years. Cities routinely survive even nuclear bombs. And “cities are the crucible of civilization." They are the major source of innovation and wealth creation. Currently they are growing exponentially. “Every week from now until 2050, one million new people are being added to our cities."

Such a theory already exists in biology, and you can build on that. Working with macroecologist James Brown and others, West explored the fact that living systems such as individual organisms show a shocking consistency of scalability. (The theory they elucidated has long been known in biology as Kleiber’s Law.) Animals, for example, range in size over ten orders of magnitude from a shrew to a blue whale. If you plot their metabolic rate against their mass on a log-log graph, you get an absolutely straight line. From mouse to human to elephant, each increase in size requires a proportional increase in energy to maintain it.

But the proportion is not linear. Quadrupling in size does not require a quadrupling in energy use. Only a tripling in energy use is needed. It’s sublinear; the ratio is 3/4 instead of 4/4. Humans enjoy an economy of scale over mice, as elephants do over us.

With each increase in animal size there is a slowing of the pace of life. A shrew’s heart beats 1,000 times a minute, a human’s 70 times, and an elephant heart beats only 28 times a minute. The lifespans are proportional; shrew life is intense but brief, elephant life long and contemplative. Each animal, independent of size, gets about a billion heartbeats per life. (West added that human bodies run on 100 watts—2,000 calories of food a day. But our civilizational energy use adds up 11,000 watts per person. We’re like blue whales walking around.)

Does such scalability apply to cities? If you plot, say, the number of gas stations against the size of population of metropolitan areas on a log-log scale, it turns out you get another straight line. Ditto with the length of electrical lines, carbon footprint, etc. Per capita, big city dwellers use less energy than small town dwellers. As with animals, there is greater efficiency with size, this time at a 9/10 ratio. Energy use is sublinear.

But unlike animals, cities do not slow down as they get bigger. They speed up with size! The bigger the city, the faster people walk and the faster they innovate. All the productivity-related numbers increase with size—wages, patents, colleges, crimes, AIDS cases—and their ratio is superlinear. It’s 1.15/1. With each increase in size, cities get a value-added of 15 percent. Agglomerating people, evidently, increases their efficiency and productivity.

Does that go on forever? Cities create problems as they grow, but they create solutions to those problems even faster, so their growth and potential lifespan is in theory unbounded.(West pointed out that there is a bit of variability between cities worth noticing. On the plot of crimes/population, Tokyo has slightly fewer crimes for its size, and Osaka has slightly more. In the U.S., the most patents per capita come from Corvalis, Oregon, and the least from Abiline, Texas. Such variations tend to remain constant over decades, despite everyone’s efforts to adjust them. “Exciting cities stay exciting, and boring cities stay boring.")

Are corporations more like animals or more like cities? They want to be like cities, with ever increasing productivity as they grow and potentially unbounded lifespans. Unfortunately, West et al.’s research on 22,000 companies shows that as they increase in size from 100 to 1,000,000 employees, their net income and assets (and 23 other metrics) per person increase only at a 4/5 ratio. Like animals and cities they do grow more efficient with size, but unlike cities, their innovation cannot keep pace as their systems gradually decay, requiring ever more costly repair until a fluctuation sinks them. Like animals, companies are sublinear and doomed to die.

What is the actual mechanism of difference? Research on that continues. “Cities tolerate crazy people," West observed, “Companies don’t."

Within a few weeks, charge spots where drivers can plug in their vehicles will be installed. Twelve foundation members have signed up to work with Better Place Australia in Canberra, including the ACT government, ActewAGL, Lend Lease, Crowne Plaza and the ACT Electric Vehicle Council.

"We chose Canberra because there are a large portion of two-car households with garages," Better Place Australia chief executive Evan Thornley said. About 54 per cent of Canberra households have two cars or more and 89 per cent have off-street parking, which makes it ideal for Better Place to launch, because garages are preferred charge spots.

"Canberra is the first stage in the process of delivering electric cars around Australia and having the facilities in place to service them," Mr Thornley said. Better Place recently signed a deal with ActewAGL, worth $60 million over 10 years, to purchase 100 per cent renewable energy for the electric car-charge network in Canberra. "We will be paying for everything besides the car," he said. The battery, the charging, plug-in and so forth. Consumers will just have to pay us a single membership fee and that will be determined by the distance people drive."

The Renault Fluence ZE, a five-seat family sedan automatic with a top speed of 135km/h, is expected to arrive on the local market in the middle of next year, priced between $30,000 and $35,000. Batteries will be $12,000 but the monthly membership fee is still being calculated.

"I can say that if you are paying $80 a week for petrol now, it will be cheaper to have an electric car," Mr Thornley said. "The reality is that petrol costs are increasing and battery costs will decrease as more people purchase electric cars. Therefore, it will only become cheaper to buy an electric car and run one."

Property giant Lend Lease invested $10m in Better Place Australia in 2009 and has helped to construct some of the infrastructure for the rollout.

German utility RWE has pulled funding for the world’s largest wave project in Scotland, and walked away from the 4MW facility that was to have been installed on the Scottish island of Lewis in the outer Herbrides. It will focus instead on a tidal energy plant in nearby Orkney. The decision has left the prime developer, the Scottish-based Voith Hydro Wavegen in search of new funding for the development, which is based around an oscillating water column, which uses the power of the ocean to move air in and out of specially constructed chambers, thereby driving a turbine to generate power.

Voith only last week commissioned a smaller version of the technology at a 300kW breakwater array at the Basque seaport of Mutriku, in a development co-sponsored by Spanish utility Ente Vasco de la Energia, Voith said it would continue to pursue the project at Lewis, but would seek new partners in the venture. Voith Hydro is majority owned by the German engineering group Voith and 35 per cent by Siemens.

The decision by RWE is seen by some in the industry as evidence that investor interest in marine power is tipping towards tidal technology. RWE said it was still committed to researching how best to harness marine energy off the coast of Scotland, but has chosen to redirect its efforts towards projects that are “faster and cheaper" to develop. It remained committed to a 1MW tidal development off Orkney, which will also use Voith technology. Scotland aims to harness 1.6 gigawatts of wave and tidal power in the Pentland Firth and Orkney waters.

Stuart at Early Warning has a look at the slowing rate of progress in extending maximum lifespans in spite of steadily increasing the share of the economy devoted to medical care - US Survival Statistics.

The above data are from the CDC and show the percentage of Americans surviving at each age for three different points in history - 1900, 1950, and 2006. I would expect the pattern to be fairly similar for other developed countries. The point, apropos of yesterday, is that there was a lot more progress from 1900 to 1950 than there was from 1950 to 2006. ...

Again, you can see that progress has been getter slower and slower, and most of the progress has come from eliminating things that kill young people, with much less improvement in the chronic conditions that see off the middle aged and the elderly.

But to achieve this slowing progress requires spending a larger and larger fraction of US GDP on healthcare ...

For some random reason I feel like pairing this with a quote from Orwell posted by Idleworm - wigan pier, the machine.

From “The Road to Wigan Pier” by George Orwell, 1937:

“To begin with, there is the frightful debauchery of taste that has already been effected by a century of mechanisation. This is almost too obvious and too generally admitted to need pointing out. But as a single instance, take taste in its narrowest sense – the taste for decent food. In the highly mechanical countries, thanks to tinned food, cold storage, synthetic flavouring matters, etc., the palate it almost a dead organ. As you can see by looking at any greengrocer’s shop, what the majority of English people mean by an apple is a lump of highly-coloured cotton wool from America or Australia; they will devour these things, apparently with pleasure, and let the English apples rot under the trees. It is the shiny, standardized, machine-made look of the American apple that appeals to them; the superior taste of the English apple is something they simply do not notice. Or look at the factory-made, foil wrapped cheeses and ‘blended’ butter in an grocer’s; look at the hideous rows of tins which usurp more and more of the space in any food-shop, even a dairy; look at a sixpenny Swiss roll or a twopenny ice-cream; [b]look at the filthy chemical by-product that people will pour down their throats under the name of beer.[/b] Wherever you look you will see some slick machine-made article triumphing over the old-fashioned article that still tastes of something other than sawdust. And what applies to food applies also to furniture, houses, clothes, books, amusements and everything else that makes up our environment. These are now millions of people, and they are increasing every year, to whom the blaring of a radio is not only a more acceptable but a more normal background to their thoughts than the lowing of cattle or the song of birds. The mechanisation of the world could never proceed very far while taste, even the taste-buds of the tongue, remained uncorrupted, because in that case most of the products of the machine would be simply unwanted. In a healthy world there would be no demand for tinned food, aspirins, gramophones, gas-pipe chairs, machine guns, daily newspapers, telephones, motor-cars, etc. etc.; and on the other hand there would be a constant demand for the things the machine cannot produce. But meanwhile the machine is here, and its corrupting effects are almost irresistible. One inveighs against it, but one goes on using it. Even a bare-arse savage, given the change, will learn the vices of civilisation within a few months. Mechanisation leads to the decay of taste, the decay of taste leads to demand for machine-made articles and hence to more mechanisation, and so a vicious circle is established.”

Making plastic from sugar can be just as cheap as making it from petroleum, says Dow Chemical. The company plans to build a plant in Brazil that it says will be the world's largest facility for making polymers from plants.

The project will begin with the construction of a 240-million-liter ethanol plant, a joint venture with Mitsui, that is set to begin later this year. By the beginning of next year, Dow will finish engineering plans for facilities that will convert that ethanol into hundreds of thousands of metric tons of polyethylene, the world's most widely used plastic.

Bio-based chemicals production has grown quickly in recent years, but it still represents just 7.7 percent of the overall chemicals market. Production has been limited in many cases to specialty chemicals or niche products. But Dow now says chemicals made from plant feedstocks may be ready to compete head-to-head with petrochemicals made in large volumes.

Most large-volume chemicals are made from petroleum. About 80 million tons of polyethylene are made annually around the world. But high oil prices have increased the costs of petrochemicals. And in Brazil, long-standing government support for sugarcane ethanol production has allowed the industry to drive down costs, making ethanol competitive with fossil fuels. Making polyethylene from sugar "would not necessarily be attractive in other regions," says Luis Cirihal, Dow's director of renewable alternatives and business development for Latin America.

The technology for converting ethanol into ethylene, the precursor for polyethylene, is not new. "The dehydration process for converting ethanol to ethylene has been known since the 1920s. The only thing that's really new here is the scale," Cirihal says. The new plant will have a polyethylene production capacity comparable to production at a petrochemical plant. Though the exact production levels aren't yet settled, they will be on the order of "what you have heard before," he says, referring to a proposed Dow project that would have made 350,000 metric tons of polyethylene from sugarcane. (That proposal relied on a partnership that ended as a result of the recession.) It will be bigger than a 200,000-ton sugarcane-to-polyethylene plant operated by Brazil-based Braskem.

The new plant won't be the first time Dow has invested significantly in bio-based plastics. A decade ago, it partnered with Cargill to make corn-based plastics. But Dow pulled out of that venture in 2005 after the market for the bioplastic failed to take off. Cirihal says that Dow is now taking a different approach. The earlier plastic was a new material, and proved difficult to market and distribute. He says that's why Dow decided to make a common material with an established market this time. The sugarcane-based polyethylene will perform just as well as oil-based polyethylene, he says.

An ambitious solar energy project on a massive scale is about to get underway in the Arizona desert. EnviroMission is undergoing land acquisition and site-specific engineering to build its first full-scale solar tower - and when we say full-scale, we mean it! The mammoth 800-plus meter (2625 ft) tall tower will instantly become one of the world's tallest buildings. Its 200-megawatt power generation capacity will reliably feed the grid with enough power for 150,000 US homes, and once it's built, it can be expected to more or less sit there producing clean, renewable power with virtually no maintenance until it's more than 80 years old. In the video after the jump, EnviroMission CEO Roger Davey explains the solar tower technology, the Arizona project and why he couldn't get it built at home in Australia.

Over the past two decades, China has dominated global production and satisfied 90 per cent or more of global demand. But recently, China announced that it would severely restrict its exports of REEs due to rising problems with its mines. There is evidence of polluted waterways and radiation exposure affecting not only workers, but entire communities.

The minerals which contain REEs invariably contain some thorium and uranium, both radioactive elements. It’s not the sort of stuff you want to manage poorly, as China recently admitted.

While lack of supply due to China’s restrictions might be a short-term problem, the key long-term issues are what volume of REE resources actually exist, and how can the mining and processing be managed – especially the radioactive waste.

Surprisingly, on both fronts we can be justifiably positive.

In the past, the world had little use for REEs, so miners never bothered to look for them. Given the strong expected growth in REE demand for gadgets and green technology, however, there has been a global scramble over the past year to identify REE deposits. Mining companies are now looking very hard for any trace of REEs – and they will continue to find them.

According to Geoscience Australia, Australia has 59.4 megatonnes of sub-economic REE resources in addition to its 1.65 megatonnes of economic REEs. Some 53 Mt of the sub-economic variety can be found in the giant Olympic Dam orebody in South Australia.

At the moment, the metals extracted from Olympic Dam include copper (valued at $671 billion), uranium ($287 billion), gold ($134 billion) and silver ($15 billion). Compare this with the estimated value of the REEs in the same orebody – a whopping $4,195 billion. That’s four times Australia’s current GDP.

In its current expansion plans, BHP Billiton (owner of the Olympic Dam site) is ignoring this remarkable value. The miner considers REE extraction to be “uneconomic" and claims the technology isn’t available, despite it being similar in most steps to the current processing at Olympic Dam.

Today marks the first anniversary of the untimely death of Stephen H. Schneider, a central figure in the decades-long effort to understand the human influence on climate and pursue options for limiting risks from the ongoing buildup of human-generated greenhouse gases.

At a special session on Schneider at this year’s annual meeting of the American Association for the Advancement of Science, his widow, the biologist Terry Root, showed what she said was the last photo Schneider took before taking a flight from Sweden to England on which he passed away from a pulmonary embolism. She gave permission for me to post it above.

It’s an image that captures a lot of what her husband was about — not only the wind turbine and verdant landscape but also the clear sense of motion imparted by the blurry car mirror (or whatever that object is) in the foreground. Schneider was nearly constantly in motion through his final decade despite fighting off bone cancer and other maladies.

I’m focusing this post not only on his peripatetic nature, but also his willingness to directly engage with anyone — diplomatically or ferociously as the need arose — to convey the science pointing to substantial risks ahead, amid durable uncertainty, and to explain his view of possible responses.

As I’ve noted here before, he never shied away from advocacy but always tried to separate his scientific and statistical analysis of risk from the choices he would personally make to mitigate it. As he put it in an e-mail in 2006:

To be risk averse is good policy in my VALUE SYSTEM — and we always must admit that how to take risks — with climate damages or costs of mitigation/adaptation — is not science but world views. {Read more.]

A prime instance of Schneider in action came just a few weeks before his death, on a trip to Australia to discuss climate change with 52 self-described climate skeptics on the television program Insight. It’s Steve at his best (although not at his best physically, sadly). The transcript of the program is online, but this is a case where I really think the video must be watched to catch the tone of the exchanges and the value of direct discourse. Here’s the show:

I encourage you to dive in and offer your reactions on points of debate and on Schneider’s approach. (I’ll be filing another piece shortly on A. Scott Denning, a climate scientist at Colorado State University who’s followed in Steve’s wake in engaging with those who deeply disagree with him.)

For more on my views of Steve (whom I considered a friend after more than 25 years of consulting him on climate science and policy), revisit my conversation with Stewart Brand about him for the Edge Web site. That same link includes an long and fascinating video interview.

The Stephen H. Schneider Symposium, being held in late August in Boulder, Colo., will reflect on his approach to the climate problem and culminate with a session on this question: “The challenge of climate change mitigation and adaptation: How do we translate sound climate science into sound policies?”

That remains as good, and unresolved, a question as ever, and I hope those exploring it, whatever their values and world views, keep in mind Steve’s dictum about separating science from preference and also his constant reminder that uncertainty is a form of information, not ignorance — and never an excuse for inaction.

SURGING demand for electricity, especially consumption surges in mid-winter and mid-summer, has prompted a review of the power industry in an effort to ease the pressure on rising electricity prices.

The Australian Energy Market Commission is to examine ways of cutting peak power demand, either by substituting other energy sources or boosting energy efficiency measures.

Demand for so-called peak electricity is forcing electricity generators and distributors to spend billions of dollars on equipment that is used for only very brief periods a year. This is pushing up electricity prices charged to households and businesses, some of which could be avoided.

Demand for electricity in periods of extremely hot or cold weather has risen by 3.5 per cent a year since 2005 - almost three times the rise in overall electricity demand.

The review is to look at ways in which demand for electricity can be cut during peak periods, with the intention of stemming the continuing rise in electricity prices.

As much as $38 billion will be spent on upgrading electricity networks in the next five years, and up to $37 billion by 2020 on new electricity generation equipment.

''As [electricity] prices continue to rise … consumers may consider more innovative ways to either reduce or manage electricity consumption more efficiency,'' the commission said. Effective management of peak demand may not only help ease pressure on rising power prices but help reduce greenhouse gas emissions, it said.

Measures to reduce peak electricity demand through demand-side measures, which are aimed at cutting demand, have had a limited effect and account for only a small portion of the electricity market.

A survey by the Australian Energy Market Operator found there could be as much as 719 megawatts of electricity generation capacity available in demand-side management but only 131mW is used in this way.

Big electricity supply contracts, such as to aluminium smelters in the Hunter Valley, allow supply to be interrupted for periods of time in return for lower power prices - one example of the measures to be studied. Aluminium smelters account for an estimated 11 per cent of all electricity demand, ranking as the fourth-largest user after mining.

Already, Schindall believes some electric vehicle manufacturers are using ultracapacitors for acceleration. The devices also appear in hundreds of other applications, from cell phone base stations to alarm clocks (as backup power) to audio systems.

For most music, Schindall explained, a high-end audio system with big speakers might do just fine with a 1-watt amplifier. “But then the kettle drum comes in,” demanding a sudden power surge of 1-kilowatt. One solution, Schindall said, is to build a 1-watt supply, plus an ultracapacitor to handle the peak.

Ultracapacitors hold promise for a similar job on the electric grid. Today, transmission lines operate below full capacity (often somewhere above 90 percent), said Schindall, in order to leave a buffer for power surges. Banks of ultracapacitors could be set up to absorb power surges, enabling transmission lines to run closer to 100 percent capacity.

It might not seem like much, especially considering that it would take warehouse-sized banks for ultracaps to do the job. But installing ultracapacitors to handle the peaks would actually be much cheaper, Schindall said, than adding even 5 percent more capacity with new transmission lines.

In cars, ultracapacitors could play a role in the growing market for “microhybrids,” which cut the engine during idling. In these “start-stop” systems, Schindall explained in an email, “The ultracapacitor would provide power during the stop (lights, radio, air conditioner, etc.).” It would also provide power for the restart, and then be “recharged during the next interval of travel.”

How to build better ultracapacitors

There are two basic ways to improve the performance of ultracapacitors: increase the surface area of the plate coating, and increase the maximum amount of voltage that the device can handle.

Recall old Faraday again. Capacitance, measured in Farads, is how much electric energy our device will hold given a certain voltage. Increase the voltage, and you can increase the amount of energy our device holds (energy is equal to half the capacitance, multiplied by voltage squared).

Schindall is tackling the surface area challenge using carbon nanotubes (more like a shag carpet or paintbrush than the sponge-like activated carbon). Other researchers, he noted, are working with graphene or better activated carbon. In addition to boosting the surface area, carbon nanotubes and graphene can also “withstand a somewhat higher voltage” than activated carbon, said Schindall.

The voltage challenge, meanwhile “seems to be a tougher road,” he said. Researchers are experimenting with ionic liquid electrolytes (all ion, no solvent, behaves like a liquid), which under the right conditions can operate at up to three times the voltage of conventional electrolytes.

But ionic liquids are “fussy,” Schindall said. “They don’t like being liquids,” and tend to freeze below room temperature. They’re also expensive, and they have higher resistance than conventional electrolytes, which means you can’t get energy out as fast. The maximum power—one of ultracaps’ key advantages—is decreased. As Schindall put it, “There’s always a tradeoff.”

BHP's acquisition of Petrohawk and its US shale gas assets in the Eagle Ford seems to have attracted mostly positive press attention (although the reaction of analysts seems to have been more mixed - the Business Spectator has a look at the deal - BHP's gas play ticks all the boxes.

After its $US39 billion bid for Canada’s Potash Corp was blocked last year, BHP Billiton, having already seen the failure of its proposed iron ore production joint venture with Rio Tinto stymied by regulators, came to the conclusion that the only segment of the resources sector in which it could pursue a large-scale acquisition strategy without running into political roadblocks was energy.

Having run a slide rule over all the major independent oil and gas groups, including Woodside Petroleum, however, it came to a secondary conclusion. With the oil price soaring, buying a conventional oil or gas group that met its criteria of only adding large, long-life, low-cost tier one assets meant paying massive premia at the top of a price cycle.

That reasoning led it to the surprise $US4.75 billion acquisition of Chesapeake Energy’s shale gas assets in the Fayetteville region of Arkansas in the US in February, its first big sortie into unconventional energy.

Despite the escalating environmental concerns and controversies around unconventional gas – shale gas in the US and coal seam methane in Australia – BHP likes the potential of the sector to the point where today it announced the $US12.1 billion acquisition of Petrohawk Energy. With Petrohawk’s debt, the enterprise value of the deal is $US15.1 billion.

Petrohawk is a major independent onshore shale oil and gas producer, with close to a million cubic feet a day of production from its fields in Texas and Louisiana. It earned $US390 million last year.

The significance of the acquisition to BHP is that, where the Fayetteville deal increased BHP’s net reserves and resources by 45 per cent, the addition of the Petrohawk resources more than doubles the resource base.

As BHP said, in the space of a year BHP’s petroleum business would have more than trebled its resource base to 11 billion barrels of oil equivalent. It now expects to increase its oil and gas production by 10 per cent per year for the next decade. ...

A company like BHP, with its vast balance sheet and cash flows, is able to accelerate development. It plans to spend more than $US5 billion a year over the next decade and beyond to increase production, something a Petrohawk could never contemplate.

Unlike oil, where the price is high, gas prices in the US reflect the recessed state of its economy, which also means that rather than capitalising top-of-cycle prices BHP is, it presumably hopes, entering at the bottom of a cycle.

Assuming it can manage the environmental and operational risks, the acquisition would vault BHP from outside the top 20 independent upstream oil and gas groups into the top 10.

Given that it has been pouring capital into expanding its iron ore and coal production, the step-change in the size of its oil and gas interests would also help re-balance its diversified portfolio of resource assets and strengthen the diversification of its cash flows, which has been a guiding principle since the group was re-made under Paul Anderson and Chip Goodyear in the late 1990s.

It speaks volumes for the size and resilience of BHP’s cash flows and balance sheet that it can fund a $US15 billion acquisition from its existing cash reserves, and a credit facility that will still leave the group with minimal net debt and plenty of firepower for further acquisitions and/or capital management, as well as its $US80 billion pipeline of organic expansion.

WHAT a powerhouse BHP Billiton is. Yesterday's agreed deal to take over another shale gas and liquids player, Petrohawk, for $US15.1 billion ($14 billion) increases BHP's proved oil and gas reserves by 30 per cent, and more than doubles its petroleum division's resource base. And it is also barely a blip on the balance sheet.

The Australian group will pay about $US12.1 billion in cash for Petrohawk - the $US15.1 billion enterprise value includes debt inside Petrohawk that it will inherit - and it generated enough cash flow to cover the payment in the December 2010 half year alone.

Cash flow generation is still expanding. In 2011-2012 the market expectation is that earnings generated by the ASX 200 index stable of companies will rise by about 18 per cent: BHP alone will account for about a quarter of the gain.Advertisement: Story continues below

And this deal vaults BHP's position in the oil and gas industry. Combined with the $US4.75 billion purchase of southern US shale acreage from Chesapeake Energy that BHP announced in February, it puts the group into seventh spot in the league table of independent oil and gas companies in the world, alongside names such as BG, Devon and Anadarko.

Rwanda is set to double its energy production in the next one year by tapping into geothermal, solar and methane gas to bridge the existing power deficit that is increasingly piling pressure on the economy.

The Ministry of Energy plans to increase the number of connections to the national grid from the current 120,000 to 300,000 households by next year and increase the total installed power generation capacity to 130MW.

Rwanda’s installed capacity is 64.55MW (local) and imported is 14.5MW which makes a total available capacity of 79MW with only 15 per cent of Rwanda’s population of 10 million has access to electricity.

Expensive and limited energy — electricity costs $0.22 per kWh compared with $0.08-$0.10 in the rest of the region — is raising the cost of doing business in Rwanda, according to the World Bank.

However, the government targets to have at least 1,000MW onstream by 2017, with 50 per cent of its population having access to electricity, up from the current 15 per cent.

“We have decided to have our own small ‘quick win’ projects — such as peat energy, which should generate 15MW. We will start drilling for geothermal, which should give us about 10MW, and the methane gas project will give 25MW next year,” State Minister for Energy and Water Coletha Ruhamya said last week.

Recently, the Kivuwatts project, which will allow extraction of methane gas from Lake Kivu in Western Rwanda, received a World Bank guarantee against political risks of $140million.

The $325 million gas-to-power project owned by ContourGlobal, a US based oil and gas firm, is expected to generate 100MW if completed as scheduled in 2012.

Ms Ruhamya said the ongoing projects are expected to generate an additional 60MW in the next year, helping the country bridge its energy deficit in the short term as regional projects kick off.

A round table meeting was held last week between Rwanda, Burundi and the Democratic Republic of Congo to formally approve the creation of a water management agency for the Lake Kivu basin and the new international treaty setting up the institutional framework to develop the Ruzizi III power project.

Ms Ruhamya noted that the ongoing projects would reduce the high energy costs in the long term as the country reduces dependency on petroleum products such as diesel for energy.

Currently, Rwanda imports approximately 17 million litres of oil monthly, including for industrial consumption.Michel Arrion, head of EU delegation in Rwanda said the Ruzizi project is expected to not only boost power supply to the three countries but also reduce the cost of energy.

“The Ruzizi project is going to provide about 150MW; two times the annual consumption of Rwanda, currently estimated at 82MW,” he said.

WHEN a Chinese trawler fishing in disputed waters collided with Japanese coastguard patrol boats early on September 7, the global supply of rare earths - crucial for producing smartphones, flatscreen televisions, hybrid cars and iPads - was plunged into turmoil, even if it was not immediately apparent.

And Australia's crucial role in the lucrative trade was also to be thrust firmly into the international spotlight.

The errant vessel's skipper was arrested and detained, calls for his release went unheeded, and a diplomatic row, seeded by a long-standing territorial feud, erupted between the two Asian nations. For two weeks, tensions worsened with no resolution in sight - until China decided to hit Japan where it hurt.

On September 22, Chinese Premier Wen Jiabao banned rare-earth exports to Japan, and threatened ''further action'' if the fisherman was not released. Two days later, the man was set free.

''In order to further grow our mutually beneficial relationship based on strategic interests, I believe it is necessary for Japan and China to handle matters calmly,'' Japanese Prime Minister Naoto Kan said at the time.

The export ban was swiftly revoked, but the world had received a nasty wake-up call. China has a stranglehold on the rare-earths market, accounting for 97 per cent of worldwide production. And it was clear it was prepared to use that dominance for political, as well as economic, gain.

Japan, in particular, had to find alternative sources of rare earths, or risk whole industries being affected.

New applications for rare earths are being discovered all the time. The 17 closely related elements have remarkable magnetivity and help make phones smaller, TVs bigger and display panels brighter. They also represent our best-known chance to make energy-efficient technologies, such as electric vehicles, wind turbines and solar cells financially viable.

''We are as addicted to rare earths as we are to oil, we just don't know it,'' says Nicholas Curtis, chief executive of Australian rare-earths miner Lynas Corporation.

Even before the diplomatic incident, China had begun to restrict exports of rare earths, to ensure it could meet the demand from its local industry. Shipments have been cut from 67,500 tonnes in 2005 to 30,250 tonnes last year. With prices of some rare earths having soared up to five times since the start of the year, the worldwide race to break China's stranglehold is officially on. ''I think the situation has become more acute more rapidly than anybody would have ever predicted,'' Curtis says. ''The crisis in the supply of rare earths in the last year or so has resulted from a combination of events that came together and created this perfect storm - and that focused policymakers very heavily on the strategic implications on rare earths.''

With California-based Molycorp also in the mix, Australia's Lynas is widely considered to be leading the pack. Much like Andrew Forrest's Fortescue Metals in its infancy, Lynas has rocketed from a penny-dreadful stock to a company worth $3 billion almost on expectation alone - it has yet to start production.

Transmaterial has a post on building panels made of fly ash - Fly Ash Panels.

Fly ash is the waste product of burning coal that is comprised mainly of silica, alumina, iron, and calcium. Fly ash is often combined with cement as an additive, but only up to a certain percentage of concrete may be fly ash.

Carolyn Dry has developed a method of fabricating building panels and insulation out of nearly 100% fly ash in order to sequester these heavy metals so that they do not leach out and pollute the environment. Essentially cooking the ash into a solid, Dry utilizes a flux which allows processing at lower temperatures—thus using less energy and fewer chemicals. Components such as building panels, bricks, and insulation may be produced without the need for binders such as cement.

SCIENTISTS estimate there is enough energy stored in hot rocks beneath Australia's surface to meet its power demands millions of times over, but bold prognostications have not been enough for the geothermal industry.

Kevin Rudd's abandonment of Labor's first proposed emissions trading scheme hit the industry hard, with share prices plummeting and investors baulking. "That policy backflip has hurt the industry, no doubt," says Terry Kallis, managing director of South Australian company geothermal Petratherm. Hot rocks power remains a highly speculative industry, but things are slowly looking up for Petratherm.

Last month, it began fracturing rock four kilometres beneath the Earth's surface in the North Flinders Ranges using part of a $7 million federal government drilling grant — the key step in proving a geothermal reservoir can be created deep underground and the project has a future. Mr Kallis said he believes his is the only company with an active hot rocks project.Advertisement: Story continues below

Yesterday Petrotherm's shares leapt 16 per cent, reaching a high of 23.5¢ before closing at 19¢. It is a far cry from its high of 92¢, but is an important reflection of the role the carbon price package — and a new $10 billion clean energy finance corporation, largely paid for with carbon tax revenue — could play in developing the industry.

"It has put us back on track, which is very important," Mr Kallis says.

"Every geothermal project will take a bit longer and cost a bit more because of the policy backflips that we have had, and we all rely on the equity market, which was hit with the financial crisis. [But] having a carbon price out there starts to create an investor framework and gives the industry some certainty — something we haven't had."

Changes in government policy is not the only thing that has held up geothermal investment. Projects take a long time to get off the ground and the costs are considerable with no guarantee of success.

Petratherm's project involves injecting water into rocks deep beneath the ground at high pressure in an attempt to create fractures. If successful, power will ultimately be generated by steam and hot water rising from a well and running a generator at the surface.

Petratherm has no short-term need for the new funding — it hopes to access an existing $63 million demonstration stage grant later this year. But Mr Kallis says the seed funding available from the corporation could prove valuable for the industry if well run.

Crikey has a summary of the new carbon tax introduced by the Australian government over the weekend (dubbed Australia's "Clean Energy Future" - sounds like a good title for a blog) - Carbon tax: Gillard’s ‘Clean Energy Future’ at a glance. The price is lower than I'd hoped, oil is exempt and there is lots of compensation for polluters - but its a start and the tax free threshold for income tax has been increased from $6000 to $18000 (ie. they are replacing income tax with a tax on pollution) so its a start I guess.

The government has announced its “Clean Energy Future” package to commence from July 1, 2012.

Price:

* Carbon price of $23 a tonne starting July 1, 2012, rising by 2.5% in 2013-14 and 2014-15 * Floating price from July 1, 2015 * Price floor of $15 a tonne (indexed), ceiling of $20 above the expected international price (indexed).

Pollution target:

* 5% reduction by 2020 as default position, new target of 80% reduction by 2050 * First 5 years’ caps announced in 2014 budget, extended every year by one year * Nine-member Climate Change Authority (headed by Bernie Fraser) to recommend caps and targets and advise on all aspects of the scheme * First report February 2014, then every two years. Government required to explain why if it does not adopt CCA targets.

Coverage:

* Stationary energy, industrial processes, fugitive emissions, emissions from non-legacy waste * Agriculture not covered, light commercial and household transport not covered * Other transport to face reduced business fuel tax credits outside agriculture, aviation to face higher excise; * PC to review fuel excise arrangements regarding emissions intensity * International permit use not permitted until >2015; maximum of 50% of international permits can be used by an entity.

* Pension to rise by 1.7% * Self-funded retirees to receive increase in Senior Supplement * Family Tax Benefit to rise by 1.7%.

Tax cuts:

* Two-stage increase in the tax-free threshold from $6000 to $18,200 on July 1, 2012 and $19,400 in 2015-16 – tax cut of $300pa for incomes up to $68,000 * Matching adjustment to tax rates to increase second tier (30%) to 32.5% and then to 33%; other tier rates to remain the same; no one to face a tax increase as a result of tax changes * One million people no longer have to lodge tax return.

Industry compensation:

* $9.2 billion in compensation

Emissions intensive trade exposed industries

* Under Jobs and to receive assistance on three tiers:

1. 94.5% of free permits for industries with average baseline of a minimum 2,000t CO2-e/$m revenue or 6,000t CO2-e/$m value added 2. 66% of free permits for industries with average baseline of a minimum 1,000t CO2-e/$m revenue or 3,000t CO2-e/$m value added 3. 50% for LNG industry

* Assistance to be scaled back 1.3% pa * Assistance to apply for at least six years * Productivity Commission to review assistance in 2014-15 (or earlier if there is evidence of windfall gains) with the goal of assistance being wound back in 2018 to levels proposed by Garnaut Review if PC agrees

Energy Security Fund: to pay for closure of up to 2000MW of highly-emissions intensive generation capacity by 2020, provide $5.5 billion in free permits and cash to the sector to 2016-17, establish an Energy Security Council

Clean Energy Finance Corporation: to invest $10 billion over five years from 2013-14 in renewables and low emissions technologies (not Carbon Capture and Storage), run by an independent board

Australian Renewable Energy Agency to oversee $3.2b in renewables funding, in addition to any dividends from Clean Energy Finance Corporation

SO NOW, supposedly, we know exactly what to expect when, as seems likely, the carbon tax comes into effect on July 1 next year.

The average household's costs will increase by about $10 a week. All but the top 10 per cent of households will receive tax cuts and benefit increases to compensate them for this higher cost and two-thirds of households will be fully compensated.

Uncertainty over? Don't you believe it. Now begins the search for the devil in the details. And what a frantic, spine-tingling, imaginative search it will be, led not by seekers after truth but by all those who stand to gain by convincing us disaster is about to befall us and our economy.Advertisement: Story continues below

There is much distrust of Julia Gillard and her assurances, particularly since she has broken her election promise not to introduce such a tax in this term. But how much trust can we place in her critics? Since the Coalition, in its day, has supported putting a price on carbon emissions, can we be sure Tony Abbott's change of heart isn't motivated primarily by desire to win back government?

We will be assailed by business people telling us how devastating the tax would be for jobs in their industry. Can we be sure they aren't exaggerating as they jockey for concessions? If we doubt the word of politicians, can we trust the predictions of business people?

This scheme is hellishly complex, so it contains much scope for apprehension, justified or otherwise. It is designed to change our behaviour without penalising most households - itself a puzzle to many people - so this will in time change the shape of the economy.

In truth, some industries will gain while others lose. We will hear at full voice from those fearing they will lose, while the winners stay mum, as do the great majority of industries that will be little affected.

Psychology sheds as much light on these questions as does economics. The safest prediction is that the tax won't be as bad as its critics fear, nor as benign as its defenders claim.

We can be sure of this because of humans' well-researched inability to accurately predict the future.

We almost always expect bad things to be worse than they prove to be and good things to be better than they prove.

And psychology teaches us another lesson: once the tax starts we will get used to it very quickly.

This is a better package than the CPRS it is so closely modelled on, but not by a lot.

The key problem with the CPRS was that compensation for emissions intensive industries was so great and went for so long that it neutered the price signal, meaning the entire scheme was a giant money circulator that wouldn’t have started decarbonising the economy until well into the 2020s.

The same levels of assistance will apply to big polluters again, but this time the Productivity Commission will be on the case to review whether the assistance is justified and there’s an in-built bias toward reduction in assistance to the levels proposed by Ross Garnaut in his updated report if the PC agrees. But big polluters have a guarantee that their assistance won’t be cut until at least 2017, although the PC can start its 2014-15 review early if it believes there are industries making windfall gains from compensation.

In which case, the PC should start today, because it’s the scheme is a bonanza for big polluters.

There will also be an independent body to examine the case for accelerating Australia’s laughably unambitious target of 5% by 2020. The Climate Change Authority should become a potent independent source of advice that will pressure future governments inclined to recalcitrance in the key issue of how quickly we proceed with decarbonising the economy. In this regard, the increase in Australia’s emission reduction target from 60% to 80% by 2050 will become increasingly important.

So two independent sources of pressure on future governments to improve this scheme in its two critical features: how much the price signal is neutered by compensation, and how fast we should be reducing emissions. The effectiveness of these two bodies in making the case for harder and faster progress will determine the effectiveness of the scheme. Yesterday, the Greens were fairly sanguine about that, suggesting that between the 80% target and the sheer volume of money being spent on renewables, going faster won’t be a problem. We’ll see.

The other key advantage over the CPRS is the use of tax cuts aimed at addressing EMTRs for low-income earners. This isn’t merely sensible policy, it’s actually consistent with the government’s own reform efforts so far under Julia Gillard, aimed at increasing workforce participation. The Government has correctly picked up, at least partly, on Ross Garnaut’s recommendation that the Government try to get more bang for its microeconomic buck by using compensation to improve Effective Marginal Tax Rates.

That’s the good news.

The bad news is that, like the CPRS, the biggest polluters will get the biggest handouts. The coal industry will get a staggering $1.2 billion from taxpayers in straight cash - an outrageous cave-in to the industry that is responsible, more than any other, for Australia’s contribution to global warming. The steel industry will get $300 million plus an increase in free permits above and beyond the 94.5% it will already get.

And the Clean Energy Finance Corporation may turned out to be problematic. Why is a government investing directly in an industry? What at happens if and when investments in renewables and low-emissions technology go bad? On the other hand, like the new ARENA, having industry and financial expertise guiding government spending on renewables rather than bureaucrats and ministers might achieve more than years of sub-par renewables industry policy has.

And buying abatement from the electricity sector is the kind of policy garbage we’re used to from the Opposition — clear government winner-picking. It’s an implicit acknowledgement that a low carbon price and heavy compensation won’t drive a rapid transition to less emissions-intensive electricity generation.

Indeed, courtesy of the Greens and a low carbon price, between the purchase of electricity generation abatement, the investment in renewables and the Government’s carbon farming initiative, there is much “direct action” about this plan. That means taxpayers will, yet again, be spending far too much to buy abatement - although this lacks the sheer lunacy of Greg Hunt’s “soil magic”, a plan in which the majority of Australia’s carbon abatement task would be achieved by a process owing more to Old Moore’s Almanack and biodynamic farming than science or economics. ...

This is about as voter-friendly a package as you can get while still doing something about climate change. With tax cuts for low income earners, generous overcompensation for pensions recipients and handouts to rentseekers to mute claims of job losses, the package minimises the potential for scare campaigns and special pleading.

Australia's Black Saturday fires of February 2009 burned over a million acres of land and killed 173 people. It happened because of record high temperatures and a 20% drop in rainfall over the previous 12 years. It was what climate experts had been predicting for some years: the megafire. A megafire is hell come to earth.

The energy equivalent to 1,500 Hiroshima-sized atomic bombs was released in a fire storm that saw rivers of flame – sometimes rising 100 metres in the air – flowing through the countryside, generating winds of up to 120km an hour with new fires spotlighting 35km ahead of the main fire front.

Black Saturday reminded many Australians of what they know only too well: that of all the advanced economies, Australia is perhaps the one most vulnerable to climate change. And yet support for action on climate change, which was a key factor in the ending of 11 years of conservative government in 2007, has now largely collapsed.

In a story of ironies, a Labor government rarely characterised in recent times by either vision or courage has just announced a raft of measures, centred on a carbon tax, to reduce Australia's carbon emissions, an act at once brave and visionary. It was, though, forced on them by others.

It has been the strangest of battles that has already claimed two opposition leaders and one prime minister. And depending on who wins it, the rictus smile of Australian public life – behind which has hidden for years a paralysis of thought and action and has seen the coal and iron ore barons, the shock jocks and the Murdoch press seeming to set the political agenda as much as parliament – will continue or begin to break. ...

That there is to be any action at all is to the credit of the Greens, who won the balance of power in the Australian senate in that election and made the carbon tax the condition of their support for Gillard's minority Labor party. But the package of measures now announced are far from what the Greens argue is necessary to combat climate change by a nation which in spite of its small (22 million) population is one of the world's top 20 carbon polluters.

Perhaps it could not be otherwise. Australia has avoided recession because of its resource industries. Unemployment is under 5%. The coal, iron and gas barons combine massive wealth with a certain psychological dominance – without us, where would Australia be? – which is implicit in all their public posturing and pressurising. They interpret national interest as their profit and loss ledger and that, they regard, along with their successful bullying of public life, as being under attack from a carbon tax.

Along with Abbott's Liberals, they are keenly aware of Labor's tenuous hold on power. Gillard's minority government survives on just a one-seat margin and is languishing in the polls at 27%. Whoever wins the carbon tax battle wins government at the next election.

Gillard, on her side, has to placate her coalition of Greens and independent rural MPs, soothe an electorate worried about cost of living increases, and throw enough protection money at the big resource companies to stop them fully setting their dogs on her. The measures thus contain a large reform of tax in favour of the poor and large subsidies to big business to compensate for reduced profits. Her dilemma is that the only package she can get up in consequence is one that fails to deliver the very change that is needed.

And so, though designed with mechanisms for increasing decarbonisation, the tax begins life as modest in its impact, riddled with compromises, exclusions, bribes to both voters and corporations, a low carbon price of $23 (£15) a tonne and a very low carbon emission reduction target of 5% by 2020 – about half that required to stabilise carbon emissions at 550 parts per million (ppm), if other countries take comparable action.

The government's own climate change adviser, Ross Garnaut, has calculated that halting the growth in emissions at 550ppm-650ppm would lead to an average temperature rise of 3C to 4C – a rise with disastrous implications for Australia. Selling such a convoluted raft of measures is difficult: former Labor prime minister Bob Hawke has compared it to making "ice cream out of a bucket of shit''.

And selling it is a prime minister with the speech and appearance of a dying metronome – sometimes seeming so inept it has been said she couldn't sell the wheel – dragging along behind her a Labor party that must now present the measure Labor didn't want as Labor's achievement.

It may be that the carbon tax is the final chapter in the strange death of Labor Australia. A once great reforming tradition is now too often the captive of fears and dogmas generated in the service of corporate Australia; under attack from the right by an able populist leader, who has never been burdened by the need for consistency or coherence and rarely challenged on either; and from the left by the increasingly popular Green party.

Many arguments are already being made against the tax. The best argument that can be made for it is that, like all great reforms, it is a historic beginning. And perhaps it is the hope implicit in the carbon tax that is its most important feature.

Among many other reforms, Australians pioneered the secret ballot and universal suffrage. Whether Australia still has the courage it once had, or whether it has simply become the United Arab Emirates of the west, content to roll on for a decade or two more glossing over its fundamental problems while brown coal and fracked gas continues to keep the country afloat, remains to be seen.

The carbon tax thus looms over Australia as a large question: does Australia have the desire to move into the 21st century, or will it continue its retreat into a past as a colonial quarry for the empires of others, its public life ever more run at the dictate of large corporations, its people ever more fearful of the megafires of the future?

Yesterday the Sunday Telegraph ran a headline about Tim Tams and Weet-Bix — and how Gillard would use them as ‘typical Aussie’ products that would rise only a fraction under the carbon price. Today as I open the newspaper I can see that the headlines are similar: how much will this cost? What will the compensation be? Who will be better off when we introduce a policy to put a price on pollution?

The government even has a calculator on its website where you can work out how much it will cost you (I’ll be $33 better off, in case you were wondering).

But despite the government banging on and on about the fact that Australian families won’t be worse off under a carbon price, people still aren’t listening, because we have forgotten to talk about the ‘why’.

Why are we doing this in the first place?

Many polls have shown that people are willing to pay something to clean up our environment and invest in the future, because they can see that the outcome is worthwhile. But in this climate debate we have got sucked into the cost frame and stopped talking about what we’re trying to achieve — and people won’t pay for something if they don’t understand the point of it.

So let’s talk about what is worth paying for:

Powering Australia by 100% renewable energy is worth it.

Cleaning up our skies so we can breathe easier is worth it.

Shutting down the most inefficient power stations in the world, is worth it.

Stopping our biggest polluters pumping tonnes of pollution into the atmosphere for free, is worth it.

And ensuring that our kids still have a planet to live on in the future, is definitely worth it.

The policy announced yesterday, with $10 billion of new money for clean energy projects, and increasing the government’s emission reduction target from 60% to 80% by 2050 is a really great step in the right direction, and we need all politicians to support it, because it will start getting us to the future we want to see.

You don't have to wait to find out what the American Southwest will look like when it becomes a permanent dust bowl, with unrelenting drought conditions worse than the 1930 disaster you know from cheery books like The Worst Hard Time. Just watch this video of what it’s like to drive into a "haboob," a.k.a. a gigantic dust storm often seen in the deserts of the Middle East -- hence its Arabic name.

Continuing the planet's recent theme of "extreme weather is the new normal, puny ape-people," this haboob is right in line with scientists' predictions for what will happen to Arizona and the rest of the Southwest -- all the way up to Kansas -- this century.

Phosphate has been essential to feeding the world since the Green Revolution, but its excessive use as a fertilizer has led to widespread pollution and eutrophication. Now, many of the world’s remaining reserves are starting to be depleted.

If you wanted to really mess with the world’s food production, a good place to start would be Bou Craa, located in the desert miles from anywhere in the Western Sahara. They don’t grow much here, but Bou Craa is a mine containing one of the world’s largest reserves of phosphate rock. Most of us, most days, will eat some food grown on fields fertilized by phosphate rock from this mine. And there is no substitute.

The Western Sahara is an occupied territory. In 1976, when Spanish colonialists left, its neighbor Morocco invaded, and has held it ever since. Most observers believe the vast phosphate deposits were the major reason that Morocco took an interest. Whatever the truth, the Polisario Front, a rebel movement the UN recognizes as the rightful representatives of the territory, would like it back.

Not many people would call phosphate a critical issue or one with serious environmental consequences. But even leaving aside the resource politics of the Sahara, it is an absolutely vital resource for feeding the world. It is also a resource that could start running low within a couple of decades — and one we grossly misuse, pouring it across the planet and recycling virtually none of it.

The world’s food supplies are alarmingly dependent on the phosphate fertilizer that is hewn from the desert of the Western Sahara. The vast open-cast mine at Bou Craa delivers several million tons of phosphate rock every year down a 150-kilometer-long conveyor belt, the world’s longest, to the Atlantic port of El Ayoun. From there, it is distributed around the world and made into fertilizer.

Morocco’s phosphate reserves are owned by the Office Cherifien des Phosphates, a Moroccan state agency. Given the almost unlimited executive powers of the Moroccan monarch, it might reasonably be said that most of the world's known reserves of phosphate are, in effect, owned by King Mohammed VI and his Alaouite dynasty, which has reigned in Morocco since the 17th century.

If the people of Western Sahara ever resume their war to get their country back — or if the Arab Spring spreads and Morocco goes the way of Libya — then we may be adding phosphate fertilizer to the list of finite resources, such as water and land, that are constraining world food supplies sooner than we think.

Ocean energy is the next big thing, says Jean-François Ally, a senior project manager with Alstom Hydro of France. And generating electricity from the famous Bay of Fundy tides will only be the start, he said.

Alstom, besides being the world's second-biggest trainmaker after Bombardier Inc., holds third place in power generating equipment. It has a turbine plant at Sorel-Tracy, near Montreal.

Ally, speaking at an energy conference in Halifax, said his company has partnered with Vancouver's Clean Current Power Systems to deploy one of three test tidal turbine-generators in the Bay of Fundy in 2012. Lockheed Martin and Irving Shipbuilding are also partners in the test program.

The Maritimes have dreamt of harnessing the Bay of Fundy and its 55-foot tides for 50 years or more. Nova Scotia installed a Swiss-designed tidal pilot plant at the head of Fundy about 30 years ago but a full-scale development never overcame technical and financial obstacles.

In just the past two months alone (all subsequent to the killing of Osama bin Laden), the U.S. Government has taken the following steps in the name of battling the Terrorist menace: extended the Patriot Act by four years without a single reform; begun a new CIA drone attack campaign in Yemen; launched drone attacks in Somalia; slaughtered more civilians in Pakistan; attempted to assassinate U.S. citizen Anwar Awlaki far from any battlefield and without a whiff of due process; invoked secrecy doctrines to conceal legal memos setting forth its views of its own domestic warrantless surveillance powers; announced a "withdrawal"plan for Afghanistan that entails double the number of troops in that country as were there when Obama was inaugurated; and invoked a very expansive view of its detention powers under the 2001 AUMF by detaining an alleged member of al-Shabab on a floating prison, without charges, Miranda warnings, or access to a lawyer. That's all independent of a whole slew of drastically expanded surveillance powers seized over the past two years in the name of the same threat.

Defense Secretary Leon Panetta declared Saturday that the United States is "within reach" of "strategically defeating" Al Qaeda as a terrorist threat, but that doing so would require killing or capturing the group's 10 to 20 remaining leaders.

Heading to Afghanistan for the first time since taking office earlier this month, Panetta said that intelligence uncovered in the raid that killed Osama bin Laden in May showed that 10 years of U.S. operations against Al Qaeda had left it with fewer than two dozen key operatives, most of whom are in Pakistan, Yemen, Somalia, and North Africa.

In one sense, it's commendable that Panetta is acknowledging this, though he's doing so to protect the President from political attacks in the wake of his announced withdrawal of 30,000 troops from Afghanistan. But in another, more important sense, Panetta knows that this disclosure won't even slightly impede the always-expanding National Security State and the War on Terror which justifies it -- just like the acknowledgment long ago that there were fewer than 100 Al Qaeda operatives in all of Afghanistan had no effect on our decade-long war there. That's because -- as the above-described events of the last eight weeks demonstrate -- civil liberties assaults and expansions of executive power are not what the U.S. Government does in response to some actual problem; it's what the public-private consortium composing the U.S. Government is. Terrorist villains are the pretext for, not the cause of, those policies, and they will continue irrespective of the scope or magnitude of Terrorism.

Indeed, even as he described the puny, broken, absurd state of Al Qaeda -- one that has, at most, produced a grand total of one attack on U.S. soil in the last decade and a handful of amateurish, low-level attempts thwarted by regular police powers, and kills fewer Americans each year than intestinal ailments -- Panetta claimed "that it would take "more work'"; that "now is the moment following the death of Bin Laden to put maximum pressure"; that "it was from Yemen -- not Pakistan -- that the U.S. faces the most potent threat of future terrorist attacks, from an Al Qaeda offshoot known as Al Qaeda in the Arabian Peninsula, where "the group has gained strength in recent months as unrest has swept through Sana, the capital, and large swaths of its rugged hinterlands, where militants are growing in strength"; and that we have to kill all the remaining operatives. In other words, he offered multiple reasons why the War on Terror and the civil liberties abuses justified in its name must not only continue but be escalated.

For a long time we've been going with the same Scariest Jobs Chart Ever, which we ran this morning. It shows how bad this "recovery" has been compared to past ones.

It's really scary, but we're confident that we have a new winner.

It shows the average duration of unemployment, and it's skyrocketing without any hint of slowing down.

Even though we're "creating jobs" each month, this would seem to point to a large, brewing, structural unemployment problem, with a significant chunk of the population permanently out of the workforce. Historically, we've never seen anything like this, and the fact that we only had one down-blip during the recovery is stunning,

On another front, Megan McArdle posted this fascinating graph, which shows the number of new pharmaceutical molecules successfully bought to market per billion of R&D spend:

As you can see, productivity in this area has been dropping very fast - it's getting harder and harder to come up with worthwhile new drugs. It looks to me like the spend per molecule increases by a factor of ten about every thirty years - about 8% per year. So that's much faster than just salary growth - most of it is dropping productivity.

This makes a similar point to what I made in Moore's Law vs the Flynn effect. Apologists for proceeding as rapidly as possible to a singularity like to claim that there's nothing to worry about because we'll use all this fantastic AI to integrate with and augment human intelligence and make being human more and more fun and fantastic. But whenever you look at actual trends on making humans better/healthier/smarter etc, you see very modest progress and/or diminishing returns, while the progress of the machines is much faster. To me, that suggests the main symptom of the approach to the singularity will be to render a larger and larger fraction of the human population unemployable. And that's been going on for a few decades now:

Finally, yesterday, Jamais Cascio had a very weak argument for why there's nothing to worry about:

Our technologies are not going to rob us (or relieve us) of our humanity. Our technologies are part of what makes us human, and are the clear expression of our uniquely human minds. They both manifest and enable human culture; we co-evolve with them, and have done so for hundreds of thousands of years. The technologies of the future will make us neither inhuman nor posthuman, no matter how much they change our sense of place and identity.

and

Technology is part of who we are. What both critics and cheerleaders of technological evolution miss is something both subtle and important: our technologies will, as they always have, make us who we are—make us human. The definition of Human is no more fixed by our ancestors’ first use of tools, than it is by using a mouse to control a computer. What it means to be Human is flexible, and we change it every day by changing our technology. And it is this, more than the demands for abandonment or the invocations of a secular nirvana, that will give us enormous challenges in the years to come.

Essentially, his argument comes down to saying that since nothing really terrible has happened due to our use of technology yet, nothing really terrible can happen in the future either. The Sumerians might beg to disagree, if only their civilization hadn't collapsed from salting their fields with new-fangled irrigation technology. More importantly, creating intelligence that can duplicate more and more of human's mental capabilities is fundamentally different than all other prior technological progress. Why? Because, once that is accomplished, we have nothing left to offer the economy in the way of productivity. It won't need us. I have no idea what will happen as a result, but I wonder if we'll just go crazy before we get there.